New Delhi

Chinese regulators have reportedly convened with financial institutions to address the challenges faced by state-backed property developer China Vanke.

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According to two sources familiar with the matter, regulators urged large banks to boost financing support while urging private debt holders to consider maturity extensions.

These discussions come amidst growing concerns over Vanke's liquidity, prompting regulators to coordinate efforts to support the company.

The sources, speaking on condition of anonymity due to the sensitivity of the issue, emphasised the urgency for progress without specifying the timeline of these requests.

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One of the sources revealed, "Banks to ensure (Vanke's) financing, insurers to extend maturities for private debt, (every party) to guarantee the repayments of public bonds."

However, China Vanke declined to comment on the matter. Requests for comments from the National Administration of Financial Regulation and the State Council Information Office, responsible for media inquiries, remained unanswered.

Reports indicate that investors have been offloading shares and bonds of Vanke in recent weeks due to liquidity concerns.

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The developer, once perceived as financially stable, has sought debt maturity extensions with some insurers, further worsening market stress.

The tightening repayment requirements by certain national commercial banks have compounded Vanke's financial strain, according to another source familiar with the situation.

The fourth quarter of last year saw a significant decline in new bank loans issued to Vanke, plummeting by more than half compared to the same period in the previous year.

Insurers, including Taikang Insurance, state-owned PICC Property and Casualty, and New China Life Insurance, have reportedly received requests from Vanke for debt extensions.

The apprehension about Vanke's financial health arises amid a series of defaults by prominent developers such as China Evergrande Group and Country Garden since the property sector's descent into a debt crisis in 2021.

Experts caution that Vanke is one of the few developers with investment-grade credit ratings, so any problems with payments might further damage investor trust.

In response to mounting concerns, Vanke reassured stakeholders by disclosing in a filing on Friday that it had deposited the necessary funds to repay $630 million US dollar notes due on Monday.

This move aims to alleviate anxieties surrounding Vanke's immediate financial obligations. However, the broader challenges confronting the company underscore the complexities facing China's property sector as it grapples with mounting debt pressures.

(With inputs from Reuters)